The FCA has announced that it will ban the mass marketing of speculative mini-bonds to retail consumers.
The FCA ban will mean that unlisted speculative mini-bonds can only be promoted to investors that firms know are sophisticated or high net worth investors. Marketing material produced or approved by an authorised firm will also have to include a specific risk warning and disclose any costs or payments to third parties that are deducted from the money raised from investors.
Firms which approve financial promotions are already required to ensure that those promotions comply with FCA rules. The FCA has also published guidance on the requirements on firms when approving the financial promotions of unauthorised persons. The FCA believes that many promotions still fall short of existing requirements and firms which approve the financial promotions of unauthorised persons may not be taking adequate steps to ensure that they comply with the rules before approving them.
The FCA also intends to launch a communications campaign to improve consumer awareness of risks and to inform consumers about what they should consider before investing in high-risk investments. The FCA continues to work with HM Treasury on its review into the regulatory framework for the issuance of non-transferable debt securities.